This time last year, the country was still picking up the pieces from a government shutdown that rattled the confidence of many small business owners. Go back one year earlier, and we were barreling toward the so-called fiscal cliff, with the nation bracing for a devastating combination of tax hikes and spending cuts.
By comparison, this year was something of a reprieve, as federal policymakers, albeit still stuck in gridlock, at least managed to avoid any real brush with disaster. In fact, on some issues, like small-business contracting and the health care law, lawmakers and administration officials managed to come together and make a little progress.
Still, this year brought its fair share of disappointments, too. Some of the key changes sought by entrepreneurs, including certain revisions to the tax code and crowdfunding rules, continue to elude them.
So, before we turn the page to 2015, here’s a look at this year’s biggest stories for start-ups and small businesses.
New small business leaders
Entrepreneurs have three primary policymakers in Washington who carry the small-business torch — the heads of the House and Senate small business committees in Congress and the head of the U.S. Small Business Administration. In the past year, two of those positions have changed hands, and one of those two will change hands again at the end of the year. The third will change next year, too.
First, President Obama appointed Maria Contreras-Sweet to lead the SBA, filling a seat on his cabinet that had been vacant for more than a year. Contreras-Sweet, a native of Mexico and founder of a community bank in California, has already introduced several new initiatives intended to modernize and streamline the agency’s operations as well as expand its support for fast-growing and often tech-heavy upstarts.
On the Hill, Sen. Maria Cantwell (D-Wash.) took over as chair of the Senate small business committee this summer. However, with Republicans taking back the chamber in the midterm elections, Cantwell will pass the gavel on to Sen. James Risch (R-Idaho) come January. Meanwhile, Rep. Sam Graves (R-Mo.) will also step down as chairman of the small business committee after six years, in keeping with term limits agreed to by House Republicans. Rep. Steve Chabot (R-Ohio) will take his place.
Government finally hits contracting goal
By law, the federal government must strive to spend at least 23 percent of its contracting dollars at small businesses every year. However, it had been eight years since agencies last hit the mark (in 2005). This fall, SBA officials announced that agencies had awarded $83.1 billion worth of contracts to small firms last year, representing 23.39 percent of the total
There’s reason to expect departments to continue hitting the mark, too. Starting this past year, agency leaders can be held accountable in performance reviews for meeting the small business contracting goals. In addition, Congress recently passed additional legislation intended to help more small businesses win awards, including expanding a special contracting program to small, women-owned businesses and streamlining the contract bidding process for small construction companies.
Health care law’s ails, revival
It was a rocky opening year for the federal health care law and new insurance portals, particularly for the online small-business marketplaces. Whereas most of the early wrinkles were eventually ironed out on the new marketplace for individual and family coverage, small companies in most states were left without an online health insurance portal for much of 2014. Consequently, enrollment fell well short of expectations.
However, the tide may be turning. The federal government, whose health exchanges are being used by the majority of states, finally launched an online small business site in November, presenting employers with the opportunity to shop for plans online for this coming year. One month in, it appears the site is functioning smoothly, though it remains to be seen whether that will result in higher enrollment by small businesses.
Tax talk, but no action
Momentum built up around a number of tax-related issues this past year, only to eventually fizzle out. For starters, the head of the tax writing committees in the House (Michigan Republication Rep. Dave Camp ) and Senate ( then-Sen. Max Baucus) entered the year with aspirations of crafting a comprehensive tax reform measure that would overhaul the nation’s outdated individual and corporate tax codes. But with Baucus leaving to become ambassador to China earlier this year and the House turning its attention to other matters, those ambitious plans slowly fell apart.
Then this summer, lawmakers breathed new life into online sales tax legislation, which would require Internet retailers to start collecting sales tax, attempting to pin the bill to another Internet-related measure moving through the House. Supporters believed this would finally be the year to level the playing field between online and brick-and-mortar retailers; but the online sales tax piece was eventually omitted from the final bill.
And earlier this month, it appeared that small businesses would finally see Congress make permanent several temporary tax credits known as extenders, which apply to certain business investments. Repeatedly allowed to expire only to later be retroactively reinstated, some of the most popular breaks would have been made permanent by a bipartisan deal forged by Senate and House leaders. However, a veto threat from the White House derailed the agreement, resulting in a deal that revived the extenders only through the end of 2014.
Crowdfunding on hold
In perhaps the biggest small-business story of 2012, Congress overwhelmingly approved the Jumpstart Our Startup Businesses (JOBS) Act, which included provisions allowing entrepreneurs to raise small amounts of capital online through a process commonly known as crowdfunding. Now approaching the law’s third birthday, those rules are still not in place, though, fueling confusion and in some cases anger from entrepreneurs and investors who have been waiting to start using the online process.
It’s up to the Securities and Exchange Commission to write the rules and give crowdfunding the green light. And while it appeared the agency would finalize the rules sometime this year after releasing proposals for comment in October 2013, officials recently announced that it could be early 2016 before equity crowdfunding gets the go-ahead, drawing more ire from the entrepreneurship community.